Employment benefit that is worth your while Part II

Last month, my blog post here elicited this comment


Anonymous said...

I am no fan of this banker, but in order to be objective one should compare with similar positions in other banks as well

I think you have missed the point then. Comparison of the share option price vs the ESOS and what a 3rd party had to pay was clear enough....and anony #3 eloquently added on to it. No matter, benchmarking is what you seek and benchmarking is what you'll get. I already have the annual accounts of Maybank and CIMB when I wrote the first piece.

For financial year ended 31 December 2009, CIMB Group paid out RM21,323,000 as total directors remuneration, with RM16,124,000 for 2 executive directors




A staggering RM14,500,000 was paid to Nazir alone, which represented 68% of the total remuneration of all directors, or 90% of the total executive directors' remuneration.

In addition, he held 27,463,261 ordinary shares as at 31 December 2009 (the next highest director shareholding was Md Nor Md Yusuf at 400,000 shares) with interim and final dividend of RM0.25 for financial year ended 31 December 2009, there was another RM6,865,815 dividend for him; more than 4 times the total remuneration for the year of the other executive director, Mohd Shukri Husin.



Maybank Berhad has been around longer than CIMB and one of the leading banks in Malaysia.

Total profit before tax and zakat for CIMB for financial year ended 31 December 2009 was RM3,811,877,000 and total revenue, broken down as follows:


Interest income 10,539,770,000 ; income from Islamic banking operations 807,060,000; Non-interest income 3,793,557,000 making it a grand total of RM15,140,387,000


By comparison, Maybank has a larger revenue base was RM17,586,337,000 with profit before tax and zakat of RM1,674,292,000; lower than CIMB due to impairment losses on associates & goodwill of RM1,972,585,000


With a larger revenue base, yet total directors' remuneration was merely RM8,647,000; less than half of CIMB.


The 2 Executive Directors of Maybank (Abdul Wahid Omar and Aminuddin Md Desa) received from the Group a grand total of RM2,121,000 for financial year ended 30 June 2009, compared to RM14,500,000 for Nazir.

The shareholders of CIMB would have valid reasons to ask why they have been charged premium pricing for services of a executive director, 14 times the average going rate paid by it's competitor.

Broken down further, it is 10.3 times and 20.5 times over Abdul Wahid and Aminuddin's remuneration respectively; in the year where FDI into Malaysia declined by 81% and the Malaysian economy suffered negative growth.

Perhaps the justification of pricing difference lies in the intricate political-economical connection nurtured and entrenched since the days of the Malaysian Maverick, which continue to thrive and grow today.

In case you are wondering, the highest director shareholding in Maybank as at 30 June 2009 was Spencer Lee Tien Chye at 520,781, no where near Nazir's grand 27 million ordinary shares in CIMB, while the above 2 ex. directors are not even listed.


Moving back 1 year, back in 2008, total payout to executive directors was RM8,429,000 shared by 4 directors, Amirsham A. Aziz got the highest at RM5,656,000, less than half of what Nazir got a year later.





So anony #1, happy now?

Sigh, when I think of the 2.5% fixed deposit available to individual consumers and base lending rate around 6%, is there a case of super normal profits for banks which enable them to pay out such impressive numbers and absorb "losses"?

What about the feeling of the rank and file in banks as eloquently expressed by commentator #3? Admittedly compared to construction workers or factor operators they lead a better life but the earnings gap in Malaysia is not a satisfactory situation for the majority, judging by the Gini Co-efficient index.


11 comments:

  1. Would you please, detail out the GLC aspects of both CIMB and Maybank.

    The Malaysian Gov't has shares/equities in these two.

    If the compulsion of petrol stationers to bank with CIMB is any consolation, Nazir should not receive such rent, making him a ranked billionaire?

    ReplyDelete
  2. I personally know Spencer Lee or we call him Uncle Spencer and as to why he is competitively paid and not overpaid, the reason is because he is not politically connected. He works through his rank and was posted to Singapore as country manager and subsequently transferred back to Msia to be Head of Consumer Banking before taking up the post as a Director of Maybank group.

    ReplyDelete
  3. Matmouse, now that is an interesting angle...if you read the other posts, you can see CIMB have a big say in government fund raising

    http://wangsamajuformalaysia.blogspot.com/2010/05/sweating-over-direction-of-malaysias.html

    http://wangsamajuformalaysia.blogspot.com/2010/05/malaysians-you-are-owing-more-and-more.html

    anony 2, it is heartening to hear at least we still have some meritocracy being practiced. someone got to do the real work?

    ReplyDelete
  4. hey you guys talk as if you do not believe in meritocracy. you're just loooking at total revenue base - how about actual profitability? 3.8b vs 1.9b? How about market valuations? Come on, do some analysis there and show us the figures. going by your total revenue criteria, wahid ought to be paid more than nazir right? hahaha that fella doesn't even come close, no match whatsoever.

    ReplyDelete
  5. ok, by market valuation, is CIMB worth 10 times more than Maybank hence justify the 10 times over Maybank ED?

    why don't you come up with your own valuation to say he is worth 10 times more than the Maybank MD?

    do you not think the supernormal profit gain has anything to do with affiliation and connection? is there a level playing field? class struggle, it seems, exists even amongst the elit...where the rest of the 85% Malaysians not even qualified to pay income tax are left kais pagi makan pagi kais petang makan petang

    even by comparison within CIMB itself, how can 1 single ED took up 68% of the total directors' remuneration of a public-listed financial institution that has a fiducary duty to the public who pay a lot of interest into CIMB?

    ultimately it is the shareholders of CIMB who has the legal position to say yes or no, altbeit we all know most of the AGM is a foregone conclusion

    ReplyDelete
  6. http://www.malaysia-today.net/mtcolumns/from-around-the-blogs/33841-employment-benefit-that-is-worth-your-while-part-ii

    written by antares, August 16, 2010 15:05:19

    Ikut Suka Aku ... lah! Kamu semua yang tak sedar diri beri aku kuasa! Padan muka kamu semua! ..

    What all this shows, irrespective who we are, aren't we all being taken for fools, dumb and retarded A*****es? Ingat tak dulu masa zaman si toyol , Gaji CEO SYABAS berapa ribu sebulan??? Bila dia pencen, gratuity agaknya nak bayar berapa!!!
    +8 ...

    written by singhkris, August 16, 2010 14:06:59

    It is all in the family. Bapa punya duit!
    +11 ...

    written by cheekhiaw, August 16, 2010 13:29:01

    Well, if my brother prints money or is in control of the keyboards in the central bank, I'll be able to teach the world a thing or two about 'growing' a bank that idiots would admire...
    +15 ...

    written by Democrats, August 16, 2010 12:47:43

    Rocky / Syd,

    If you are really good. forget salaries and director remunerations.....

    Emulate Steven Jobs. get a Rm1 salary, the rest, in stock options. If the share price does well, exercise it, and make your fortune along with the shareholders.

    Tired of seeing directors or fund managers getting big paycheck regardless of performance.....while the ordinary people suffer through their bad judgement.
    +20 ...

    written by rocky, August 16, 2010 11:55:15

    Maybank is lagging compared to CIMB. Look how CIMB has expanded to the region with smart moves and right prices. Maybank on the other hand expanded in a very expensive way to Pakistan and Indonesia. Thus CIMB has put themselves on a growth part and will be bigger than Maybank, as it is there is small difference now which means CIMB has grown while Maybank is stagnant. So based on performance, why not pay his what is due? after all we champion merit etc. His only mistake which he can't do anything about he his brother of PM.

    so lets be fair to the man. he is his own man. Just ask his staff what they think about him., too bad didn't buy CIMB shares when he came in, would have more than double by now
    -14 ...

    written by SoundMan, August 16, 2010 11:22:54

    Robbers den...UMNO Culture through and through

    God Save Malaysia !
    +22 ...

    written by syd, August 16, 2010 11:22:02

    Up to shareholders whether to pay this guy so much. If compared to banks in singapore, it is still a pittance.
    This guy after all, made the shares of the bank go up many times over. Plus, it is trying to be a regional bank. It has bases in the four largest economy in south east asia. During the red shirt protest in bangkok, you can see CIMB brnches in full red colour on CNN..
    Another bank of comparable ASEAN base is UOB group in singapore, but it looks at its other ASEAN branches as secondary to its singapore business and not agressive in promoting them.
    Maybank, on the other hand, lost investors confidence and share price not so rosy.

    Two companies that is trying toemerge as a regional, instead of a national company, and it is CIMB and Airasia. Genting and IOI has gone global. We should be proud of these companies and their CEO's.
    -13 ...

    written by ibabonma, August 16, 2010 11:05:42

    My father was the Prime Minister, my uncle was the Prime Minister, my brother is the Prime Minister and my sister-in-law is the First Lady, so all of you shut-up for this 1 Malaysia belongs to our family.

    ReplyDelete
  7. you have provided good information on this topic, expecting more such articles from you. Even i have found good information about Chet Holmes

    ReplyDelete
  8. Hello Lee Wee Tak,

    Interesting article you have highlighted, syabas.

    Hopefully we can all understand the Holistic Global & Local Banking System including the "Shadow Puppet Masters"...

    With Nazir as their "Pawn/Executor" (“The few who can understand the system will be either so interested in its profits, or so dependent on its favours, that there will be no opposition from that class...!)

    Just to share this...

    Federal Reserve Money & Banking - Alan Greenspan's statements.
    This will make you angry!!
    http://www.youtube.com/watch?v=qTuTjE4J_7A&feature=related

    July 12, 2008

    Money controls everything...

    “The Federal Reserve is an Agency, a Private Corporation...

    There is "No" Agency of Government that can "Overrule Actions that We Take"...(or can tell "Us" what to do") - Alan Greenspan.

    "I sincerely believe the Banking Institution having the Issuing Power of Money, are more Dangerous to Liberty than standing Armies" - Thomas Jefferson

    "Politicians are predisposed not to see spending Other People’s Money as a problem, because spending Other People’s Money is what politicians do for a living.

    If politicians thought there were something wrong with it, they would be in a different line of work" - Michael F. Cannon.

    Letter written from London by the Rothschilds to their New York agents introducing their banking method into America:

    “The few who can understand the system will be either so interested in its profits, or so dependent on its favours, that there will be no opposition from that class...

    While, on the other hand, that great body of people, mentally incapable of comprehending the tremendous advantage that Capital derives from the system, will bear its burden without complaint and, perhaps, without even suspecting that the system is inimical to their interests”
    - Mayer Amschel Bauer Rothschild

    “Give me control of a nation's money and I care not who makes it's laws" - Mayer Amschel Bauer Rothschild

    Contd...Pt 2

    ReplyDelete
  9. ...Pt 2

    File Format: PDF/Adobe Acrobat - Quick View
    by HY Yu - Related articles
    1 Aug 2004 ... political connection of a board is negatively related to the distribution .....
    http://140.117.75.203/program/FullPaper/026-265289434.pdf

    "In some Asian countries, however, it is common for some directors or CEOs to be appointed by the government or to have a political background (Fan et al., 2007).

    For example, Faccio (2005)
    examines firms with government-linked directors in 42 countries and finds that politically connected firms access debt financing more easily, enjoy lower taxation and have greater market power.

    Fan et al.(2007) demonstrate that when CEOs are strongly connected with the government, their firms tend to display weak governance characteristics and low professionalism in China.

    Therefore, we can anticipate that directors with a political background are less professional and thereby cannot monitor CEOs efficiently.

    In other words, the alignment between the interests of the CEOs and those of shareholders would be less effective.

    As equity-based compensation is regarded as a major monitoring tool used by the board,
    this paper examines the role of politically connected directors on the structure of CEO compensation.

    That is, we predict that politically connected directors jeopardize the alignment between the interests of CEOs and those of shareholders." Unquote.

    SC charges GP Ocean directors | New Straits Times Newspaper - http://findarticles.com/p/news-articles/new-straits-times/mi_8016/is_20070419/sc-charges-gp-ocean-directors/ai_n44357489/

    SC charges GP Ocean directors
    New Straits Times, Apr 19, 2007

    PM - THE LAUNCH OF THE THREE SWANS - TRIBUTE TO DATIN FAKHRIAH, TUN SUHAILA & TUN RAHAH | Speeches http://www.1malaysia.com.my/sp...ala-lumpur

    "...I understand that some 500 members of the Noah family are here today. This certainly makes for a unique book launch with so many relatives all in one place. It just shows what a big family I come from. Muarians must be very productive people." Unquote.

    Weaving the life stories of 'The Three Swans' 2010/06/05 - http://www.nst.com.my/nst/articles/27swans/Article/

    "...Noah was no ordinary person. He came from the lineage that extended to Raja Chempa Bugis in the 17th century. His ancestors were the Orang Kaya of the district of Muar, an honorific title that meant more than being rich. Jalan Joned in Muar was named after his grandfather, Orang Kaya Joned Ibrahim." Unquote.

    If MAN does NOT WANT to WAKE-UP & NOT WANT to LEARN/UNDERSTAND about Globalisation, etc to take “Corrective” Steps...

    History will keep REPEATING itself & MAN will continue to be Sheeples/Suckers that allowed the "System" to create our nation's ills as well, so please wake up & get out of the Bolehland mindset to see the bigger picture!

    You be the judge.

    Cheers.

    ReplyDelete
  10. ...Pt 2

    1 Aug 2004 by HY Yu - Related articles ... political connection of a board is negatively related to the distribution .....
    http://140.117.75.203/program/FullPaper/026-265289434.pdf

    "In some Asian countries, however, it is common for some directors or CEOs to be appointed by the government or to have a political background (Fan et al., 2007).

    For example, Faccio (2005)
    examines firms with government-linked directors in 42 countries and finds that politically connected firms access debt financing more easily, enjoy lower taxation and have greater market power.

    Fan et al.(2007) demonstrate that when CEOs are strongly connected with the government, their firms tend to display weak governance characteristics and low professionalism in China.

    Therefore, we can anticipate that directors with a political background are less professional and thereby cannot monitor CEOs efficiently.

    In other words, the alignment between the interests of the CEOs and those of shareholders would be less effective.

    As equity-based compensation is regarded as a major monitoring tool used by the board,
    this paper examines the role of politically connected directors on the structure of CEO compensation.

    That is, we predict that politically connected directors jeopardize the alignment between the interests of CEOs and those of shareholders." Unquote.

    SC charges GP Ocean directors | New Straits Times Newspaper - http://findarticles.com/p/news-articles/new-straits-times/mi_8016/is_20070419/sc-charges-gp-ocean-directors/ai_n44357489/

    SC charges GP Ocean directors
    New Straits Times, Apr 19, 2007

    PM - THE LAUNCH OF THE THREE SWANS - TRIBUTE TO DATIN FAKHRIAH, TUN SUHAILA & TUN RAHAH | Speeches http://www.1malaysia.com.my/sp...ala-lumpur

    "...I understand that some 500 members of the Noah family are here today. This certainly makes for a unique book launch with so many relatives all in one place. It just shows what a big family I come from. Muarians must be very productive people." Unquote.

    Weaving the life stories of 'The Three Swans' 2010/06/05 - http://www.nst.com.my/nst/articles/27swans/Article/

    "...Noah was no ordinary person. He came from the lineage that extended to Raja Chempa Bugis in the 17th century. His ancestors were the Orang Kaya of the district of Muar, an honorific title that meant more than being rich. Jalan Joned in Muar was named after his grandfather, Orang Kaya Joned Ibrahim." Unquote.

    If MAN does NOT WANT to WAKE-UP & NOT WANT to LEARN/UNDERSTAND about Globalisation, etc to take “Corrective” Steps...

    History will keep REPEATING itself & MAN will continue to be Sheeples/Suckers that allowed the "System" to create our nation's ills as well, so please wake up & get out of the Bolehland mindset to see the bigger picture!

    You be the judge.

    Cheers.

    ReplyDelete
  11. flyer, thanks for the kind words and wealth of info - will have to take my sweat own time to go through them all

    it is however, reality in this part of the world especially that politics and finance goes hand in hand...only the degree of distribution that I question.

    people who lend their support, expect return, that is a given

    I only have issue with the degree of concentration and distribution of wealth

    there is a line that separate between what is acceptable and what is not

    ReplyDelete